Pass the FINRA General Securities Representative SIE Questions and answers with CertsForce

Coverdell Education Savings Accounts (ESAs) require that all funds be distributed by the time the beneficiary reaches 30 years old. If the funds are not used for qualified educational expenses, they may be subject to taxes and penalties.

B is correctbecause funds must be distributed by age 30 unless transferred to another eligible family member.

Ais incorrect as age 21 is not relevant for Coverdell ESAs.

Cis incorrect because age 59 ½ applies to retirement accounts like IRAs.

Dis incorrect because there is a distribution deadline for Coverdell accounts.

Step by Step Explanation:

MSRB Rule G-10: Requires municipal securities dealers to notify customers annually about the availability of the MSRB investor brochure, which explains investor protections and complaint filing procedures.

Incorrect Options:

A and B: Address and financial standing are not specifically required disclosures.

C: FINRA violations are not a required disclosure under MSRB rules.

References:

MSRB Rule G-10 (Investor Brochure Requirement): MSRB Rule G-10.

Step by Step Explanation:

Priority in Bankruptcy: Preferred stockholders have a higher claim on a company’s assets than common stockholders during liquidation. Common stockholders are residual claimants.

Dividend Priority: Preferred stockholders are entitled to fixed dividends before common stockholders receive any dividends.

Incorrect Options:

A & B: Common and preferred stocks are treated differently in bankruptcy and dividend payments.

C: Common stock dividends are subordinate to preferred stock dividends.

References:

SEC Guidance on Stockholder Rights:SEC Stock Rights.

Step by Step Explanation:

FINRA Rule 4530: Requires member firms to report certain events, including allegations of forgery, to FINRA promptly.

Incorrect Options:

Option B: Maintaining a record does not substitute for required reporting.

Option C: Arbitration isn’t required before reporting.

Option D: Reporting is mandatory irrespective of internal investigations.

References:

FINRA Rule 4530 (Reporting Requirements): FINRA Rule 4530.

FINRA Rule 3270 requires registered representatives to disclose all outside business activities that involve compensation or could reasonably be perceived as a conflict of interest.

C is correctbecause serving as a board member for a publicly traded company is a business activity requiring disclosure, even if compensation is indirect.

Ais incorrect because volunteer work for charities does not require disclosure.

Bis incorrect because acting as a trustee for a personal or family estate is generally not considered an OBA.

Dis incorrect because unpaid board membership for a not-for-profit entity does not typically require disclosure.

Step by Step Explanation:

Bullish Position: Buying ABC stock aligns with the expectation that the stock’s price will rise, allowing the investor to profit.

Incorrect Options:

A: Buying puts is a bearish strategy.

C: Selling calls benefits from stable or declining prices.

D: Selling short is a bearish strategy anticipating a price drop.

References:

FINRA Guidance on Market Strategies: FINRA Trading Basics.

Step by Step Explanation:

Front Running Definition: Occurs when a broker executes a personal trade ahead of a customer’s order to profit from the anticipated market movement.

Thinly Traded Security: Front running is particularly impactful in low-liquidity securities.

Other Options:

Selling Away: Involves unapproved securities transactions outside the employing firm.

Insider Trading: Involves trading on material non-public information.

Market Manipulation: Encompasses activities like wash trading or spoofing, not specific to this scenario.

References:

FINRA Rule 5270 (Front Running of Block Transactions): FINRA Rule 5270.

The annual interest on a bond is calculated based on thecoupon rateand the bond’s par value.

Coupon rate = 4.0%.

Annual interest = $10,000 (par value) × 4.0% =$400.

A is correctbecause the coupon rate determines the annual interest.

B,C, andDare incorrect because they reflect incorrect calculations. The current yield, YTM, and tax-equivalent yield do not affect the bond’s fixed coupon payments.

Step by Step Explanation:

European-Style Options: Can only be exercised on their expiration date, unlike American-style options, which can be exercised any time before expiration.

Incorrect Options:

A: Not accurate; the exercise must occur specifically on the expiration date.

C: Options cannot be exercised after expiration.

D: The expiration date depends on the option contract, not a specific weekday.

References:

Options Clearing Corporation (OCC) Guidelines:OCC European Options.

Step by Step Explanation:

Securitization: The process of pooling financial assets, such as mortgage loans, and creating asset-backed securities that investors can buy.

Incorrect Options:

B: Hypothecation refers to pledging assets as collateral.

C & D: Loan and claim processing are administrative terms, not related to the creation of securities.

References:

SEC Guidance on Asset-Backed Securities: SEC ABS Info.